SENATE FINANCE COMMITTEE April 16, 2016 9:07 a.m. 9:07:07 AM CALL TO ORDER Co-Chair MacKinnon called the Senate Finance Committee meeting to order at 9:07 a.m. MEMBERS PRESENT Senator Anna MacKinnon, Co-Chair Senator Pete Kelly, Co-Chair Senator Peter Micciche, Vice-Chair Senator Click Bishop Senator Mike Dunleavy Senator Lyman Hoffman Senator Donny Olson MEMBERS ABSENT None ALSO PRESENT Tom Wright, Staff, Senator Mike Chenault; Representative Gabrielle LeDoux, Sponsor; Brodie Anderson, Staff, Representative Steve Thompson; Esther Mielke, Staff, Representative Bob Lynn; Konrad Jackson, Staff, Representative Kurt Olson; Jerry Burnett, Deputy Commissioner, Treasury Division, Department of Revenue; Representative Wes Keller, Sponsor; Benjamin Huber, Staff, Senator Mike Dunleavy; Erin Shine, Staff, Senator Anna MacKinnon; Thor Stacey, Alaska Professional Hunters Association, Juneau; Kevin Brooks, Deputy Commissioner, Department of Fish and Game; Mark Luiken, Commissioner, Department of Transportation and Public Facilities; Heather Fair, Chief, Statewide Right of Way, Department of Transportation and Public Facilities; Janak Mayer, Chairman and Chief Technologist, enalytica. PRESENT VIA TELECONFERENCE April Wilkerson, Director, Division of Administrative Services, Department of Corrections; Jeff Edwards, Executive Director, Parole Board; Tom Brookover, Director, Division of Sport Fish, Department of Fish and Game; Seth Beausang, Assistant Attorney, Department of Law. SUMMARY SB 130 TAX;CREDITS;INTEREST;REFUNDS;O & G SB 130 was HEARD and HELD in committee for further consideration. CSHB 41(FIN)am SPORT FISHING SERVICES CSHB 41(FIN) was HEARD and HELD in committee for further consideration. CSHB 83(JUD) REPEAL COLLECTION OF CIVIL LITIG. INFO CSHB 83(JUD) was REPORTED out of committee with "no recommendation" and with three previously published zero fiscal notes: FN 3(ADM); FN 4(LAW); FN 5(AJS). CSHB 100(FIN) UREA/AMMONIA/GAS-LIQ FACILITY; TAX CREDIT SCS CSHB 100(FIN) was REPORTED out of committee with a "do pass" recommendation and with the previously published fiscal note: FN2 (REV). CSHB 155(FIN) FEES; WAIVERS; CREDITS; DEDUCTIONS;TAXES SCS CSHB 155(L&C) was REPORTED out of committee with "no recommendation" and with one new zero fiscal note from the Department of Revenue. CSHB 156(EDC)am SCHOOL ACCOUNTABILITY MEASURES; FED. LAW SCS CSHB 156(FIN) was REPORTED out of committee with "no recommendation" and with one new zero fiscal note from the Department of Education and Early Development. CSHB 231(FIN) EXTEND BOARD OF PAROLE SCS CSHB 231(STA) was REPORTED out of committee with "no recommendation" and with the previously published fiscal impact note: FN 3(COR). HB 259 RELOCATION ASSISTANCE FOR FED. PROJ/PROG HB 259 was HEARD and HELD in committee for further consideration. CSHB 375(FIN) ELECTRONIC TAX RETURNS & REPORTS CSHB 375(FIN) was REPORTED out of committee with "no recommendation" and with one previously published indeterminate fiscal note: FN 1(REV). CS FOR HOUSE BILL NO. 100(FIN) "An Act establishing a credit against the net income tax for an in-state processing facility that manufactures urea, ammonia, or gas-to-liquid products; relating to establishing the value of the state's royalty share of gas production based on contracts with certain in-state processing facilities that manufacture urea, ammonia, or gas-to- liquid products; and providing for an effective date." 9:08:01 AM AT EASE 9:08:28 AM RECONVENED 9:08:55 AM TOM WRIGHT, STAFF, SENATOR MIKE CHENAULT, explained the legislation. 9:11:02 AM AT EASE 9:11:17 AM RECONVENED 9:11:22 AM Senator Bishop MOVED to ADOPT Amendment 1, 29-LS0423\S.4, Nauman, 4/12/16 (copy on file): Page2, line 8: Delete "and" Page 2, line 20, following the second occurrence of "gas": Insert "; and (3) the agreement requires, to the maximum extent permitted by law, the lessee to (A) hire qualified residents from throughout the state for the management, engineering, construction, operation, and maintenance of, and other positions for, a natural gas pipeline project; (B) establish hiring facilities in the state or use existing hiring facilities in the state; and (C) use, as far as practicable, the job centers and associated services operated by the Department of Labor and Workforce Development and an Internet-based labor exchange system operated by the state" Page 3, line 5, following "shall": Insert"(l)" Page 3, line 10, following "gas": Insert "; and demonstrate to the department that the taxpayer, to the maximum extent possible, A) hires qualified residents from throughout the state for the management, engineering, construction, operation, and maintenance of, and other positions for, a natural gas pipeline project; (B) establishes hiring facilities in the state or uses existing hiring facilities in the state; and (C) uses, as far as practicable, the job centers and associated services operated by the Department of Labor and Workforce Development or an Internet-based labor exchange system operated by the state" Co-Chair MacKinnon OBJECTED for DISCUSSION. Senator Bishop explained the amendment. He stated that it complemented the intent of the bill. Senator Hoffman wanted to be listed as a sponsor of Amendment 1. Senator Dunleavy queried the change to page 2, line 6. Senator Bishop replied that the job center system would be used to access the labor in the state. Senator Dunleavy surmised that private and public entities could access the system. Senator Bishop agreed 9:13:58 AM Senator Olson wondered if there were any disagreements between Pt. Thompson as opposed to Cook Inlet, as related to constitutionality. Senator Bishop replied in the negative. Senator Olson wondered whether the amendment was constitutional. Senator Bishop replied in the affirmative. Senator Olson asked whether the sponsor was in support of the amendment. Senator Bishop replied in the affirmative. Co-Chair MacKinnon asked whether the sponsor was in support of the amendment. Mr. Wright replied in the affirmative. Vice-Chair Micciche supported the amendment. He asked to be a cosponsor of the amendment. He did not feel that the bill created an issue with constitutionality. Co-Chair MacKinnon WITHDREW the OBJECTION. There being NO OBJECTION, Amendment 1 was adopted. Vice-Chair Micciche explained the fiscal note. Vice-Chair Micciche MOVED to report SCS CSHB 100(FIN) out of Committee with individual recommendations and the accompanying fiscal note. There being NO OBJECTION, it was so ordered. SCS CSHB 100(FIN) was REPORTED out of committee with a "do pass" recommendation and with the previously published fiscal note: FN2 (REV). 9:17:28 AM AT EASE 9:20:49 AM RECONVENED CS FOR HOUSE BILL NO. 83(JUD) "An Act relating to collecting information about civil litigation by the Alaska Judicial Council; repealing Rule 41(a)(3), Alaska Rules of Civil Procedure, and Rules 511(c) and (e), Alaska Rules of Appellate Procedure; and providing for an effective date." 9:21:13 AM Vice-Chair Micciche discussed the three previously published fiscal notes. 9:22:33 AM REPRESENTATIVE GABRIELLE LEDOUX, SPONSOR, discussed the legislation: In 2005, Alaska moved away from a defined benefit (DB) to a defined contribution (DC) retirement system for public employees hired after July 1st, 2006. Both the DB and DC plans contain risks and benefits to employees and employers. With a DB plan comes the advantage of professional money management, lower fees, pooled risk and long term investment strategies. However, employers carry significant risk if investment returns fall short or actuarial predictions prove inaccurate, which they are shielded from in a DC plan. Taking both of these points of view into account, the Variable Benefit Retirement System (VBRS) was developed. The goal of the VBRS is to fund a retirement system for public safety employees through employee and employer contributions that will provide for self- sufficient retirees and protect employers and taxpayers from the liability suffered in the event of plan shortfalls. It affords public safety employees the distinct advantages and efficiencies of a DB plan by guaranteeing a benefit level and medical stipend, and affords employers the fiscal discipline and control of a DC plan by maintaining a fixed 22% employer contribution and adjusting benefit levels to address any changes in the size of the fund. Other features of the plan include: ages, adjustable medical stipend and adjustable employees contribution rates to deal with shortfalls and maintain a healthy fund